Is the Toronto real estate "bubble" bursting? Are home prices collapsing and the number of listings soaring? Will I be consumed by Lake Woodbine carp?
Spoiler alert: City of Toronto real estate is still performing well, and the carp might have left the lagoon by the time I filmed this.
Below is my latest Toronto real estate market update for June 2017. From now on I will name the report based on the month when I release it.
I'm sitting in the new lagoon at Woodbine Beach that formed during this spring’s relentless rainfalls and damaging waves. Opportunistic carp moved into to the lagoon to frolic, spawn, and do other things that carp do.
In the same way the beach has become flooded with water, has the Toronto Real estate market become flooded with listings?
And like the Lake Woodbine fish, should Toronto homebuyers be seizing this opportunity to seek out a new home?
Hi, I'm Rebecca Laing, Toronto Real Estate Broker, and Welcome to my Toronto Real Estate market update for the month of June.
The question everyone is asking is, “Has the Toronto Real Estate ”bubble” finally burst, or are we just edging towards a more balanced market?”
For the answer, let’s start by looking the average sale price for all homes types in the city of Toronto. In May, it was just under $900000, which is a 4.7% drop from the average sale price in April. This sounds like a significant month-over-month decline, but when you compare with May 2016, the Toronto average selling price is up 15%.
15% is a much more healthy rate of increase than the frighteningly high increases we saw a few months ago. I think most people knew those increases were unsustainable, and that the pace of increase would slow down at some point. A month-over-month dip like this is reasonable to expect when we are coming from such a heated pace.
Now although the average sale price is only up 15% this year over last, The Toronto Real Estate Board's benchmark price index, the HPI, shows a gain of 26.1% year over year, and an actual gain of 1.6% increase month over month. That’s right, the HPI was up in May compared to April. The HPI is designed to take into account the characteristics of the homes that have actually sold. Characteristics such as size and number of washrooms are factored into the index so that it doesn’t get skewed as much by, say a particular month that sees a lot of luxury homes sold or lots of entry level condos being sold. Thus, the HPI’s increase is an indication that May’s dip in the average sale prices could be related to a relatively higher proportion of smaller homes being sold, for example.
Let’s talk about the number of listings on the market. News headlines have repeatedly mentioned how the number new listings has jumped up 49%, and that is kind of correct if you are looking across the entire GTA, and if you are also including houses that have been re-listed over and over again within the same month, and when you compare to last year’s extremely low number of new listings in May.
Focusing on JUST the number of actual active listings in the city of Toronto for May 2017 we have 5829, compared to 5936 in May 2016. In 2016 this represented 1.3 months of inventory, while for 2017 this is 1.5 months of inventory. Month over month, inventory levels are continuing to creep upwards, but are still historically very low.
In fact, the inventory selection available right now might not last for long. Think about this: The beginning of this year saw unprecedented price increases and low inventory levels. Many sellers got excited about how much their houses are worth, and those with the option to cash-in are taking the opportunity now. We may in fact, be borrowing some inventory from the future right now, as sellers accelerate their plans to take advantage of the record high prices. On the flipside, we have buyers whose confidence has been undermined by the potential effects of the new Ontario housing plan, and fallout from the struggles of Home Capital Group. Historically, Toronto homebuyers have adapted to housing rule changes within a few months. If this happens again, our current mini surge in inventory, which really isn’t that high at all, could quickly be consumed, putting us back into very tight market conditions.
I’ll talk more about what buyers and sellers should consider after a quick rundown of the main sales stats for May.
In the city of Toronto, the average sale price for detached homes this May was $1,141,141 which is a 15.58% increase over last year. The average sale price for semi- detached homes was $824,667 up 22.91% over last year. The average for condo townhouses was $575,925 up 20.89% over last year. And Condo apartments were at an average of $531,659 which is a gain of 28.44%.
As you can see, the condo apartment segment is still showing a lot of strength. And while I don’t have stats for new construction condos, I can tell you that brand new condo launches have still had long line-ups in the last few weeks, and some have sold-out their releases within a matter of hours.
If you are thinking of buying a house and you do not currently have one to sell, now is the time to be aggressively looking for opportunities. There are still sellers out there who assumed that there home would sell in 2 days like it might have in February, but who are now getting antsy as weeks go by with few showings. You could end up like the Lake Woodbine carp, living in a new home, in a new neighbourhood that you never thought was possible!
Something to keep in mind, though, as you look at house prices online, is that it may actually look like list prices have gone way up compared to a month ago. The reason for this is that many sellers are now pricing their homes at the prices they are expecting their home to sell for, or just slightly above. In previous months, a list price of 799k, for example, would often result in a sale price of close to a million dollars in a bidding war. That is now less often the case. A list price of 800k might mean you can buy the house for a little less than 800k, and the houses that are going to sell for a million dollars are actually listed for a million. Sellers are now much more likely to list at the "buy me today" price, not the artificially low bidding war price. If you aren't sure if the list price is a real price, please feel free to get in touch with me and I will help you figure it out.
So, what does this mean for Sellers right now? If the timing is right for you, this is still a great year for selling home. Your house is still worth significantly more than it was last year, and if it is priced right, well presented and well marketed, you should still be very pleased with the outcome.
Move-up sellers have a lot to consider with timing, selling versus buying first, and having financial contingencies in place in case things don’t work out as planned. Fortunately, I’m here to help you navigate through all of this. Please feel free to call or text me at 416-357-1059, or connect with me through rebeccalaing.ca
Thank you for watching, and have a great month of June. Until next time, I'm Rebecca Laing Toronto Real Estate Broker.